First-Time Buyer Mortgages – What You Need to Know

If you’re considering buying your first property, it can seem like an intimidating process as there’s much to learn and take into account. However, this shouldn’t dissuade you from one of the most rewarding experiences you can have, as there’s lots of help out there to assist you.

With that in mind, we now answer some of the main questions we get asked regularly, as they are the most relevant to what we’re discussing. Everyone has been where you are right now and there is lots of support and incentives that relate to first-time buyer mortgages, so the important thing is to do your homework and not worry.

So, let’s get started.

A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

“How Much Can I Borrow?”

Before you make your application, you need to have a rough idea about whether your first-time buyer mortgage is affordable for you. In order to work that out, you need to understand how affordability is worked by lenders out in relation to your yearly income.

Depending on how much you are looking to borrow determines which lender you approach for your first-time buyer mortgage, but you’ll typically be able to borrow either a multiple of x4 up to x5.5 of your annual pay as a ceiling, although ultimately this will be based on the lenders affordability criteria. This formula will usually apply whether you’re self-employed or in full-time PAYE employment and any other credit commitments you have, such as Personal Loans, Hire Purchase agreements, Credit Cards, Child Maintenance and in some instances, childcare costs may reduce your affordability.

Also, over time, bonuses, commissions and benefits may increase your affordability levels, however, lenders don’t treat these items the same way. Don’t worry though, as we can help guide you through applications with these lenders and get you the affordability you need.

Having a guarantor may help you increase your affordability. A guarantor mortgage is where a parent or family member takes some of the risks of the mortgage by acting as a guarantor. Guarantor mortgages are designed to help someone with low income, small deposit, bad or no credit history.

“What Amount of Deposit Does that Involve?”

Nowadays, even first-time buyer mortgages typically require a minimum deposit of 5%, however, in most cases the more deposit you put down then further deals will become available to you, the rate will depend on your needs, circumstances and preferences. If you don’t have the savings yourself, but your family is willing to help you they can gift you the deposit, this can really improve your chances of getting a top mortgage deal.

There is also a government directive called the ‘Help to Buy Scheme’ https://www.helptobuy.gov.uk/equity-loan/equity-loans/ which has been designed to help people get on the housing ladder for the first time. Under the terms of the scheme, you’ll only need to find a 5% deposit, with the government contributing a further 20% equity fixed at 0% for 5 years. This scheme is restricted to only new build homes for first time buyers (as well as homeowners looking to move) and have a purchase price of up to £600,000 in England (or £300,000 in Wales).

We’d recommend you take a look at the scheme via the link provided, as it can be a real game changer for those struggling to find sufficient deposit. There’s a fair amount of small print relating to the repayment of the equity after the 5 years, so we’d encourage you to read everything thoroughly.

“What Fees Will I Have to Pay?”

When applying for a first-time buyer mortgage, as with any mortgage, there are a variety of costs that you may not be aware of. So, to avoid any nasty surprises further down the line, you need factor the following costs into your affordability calculations. They include:

Property surveys

Property valuations

Local searches

Conveyancing costs

Stamp Duty on homes over £300k

Broker Fee

Protection cost

You may not have to pay all the costs shown above, but you need to be aware that they may be applicable and make the relevant enquiries so that you’re prepared for what’s to come.

“How much is our Mortgage Service?”

At REMOUK, for establishing your needs, undertaking research and making a recommendation, we do not typically charge a fee. For more complex cases, for example, adverse credit, complex income or restricted eligibility, which require additional research and sourcing resources, we typically charge a fee of £399.00.

If you choose to proceed with our recommendation and the mortgage goes ahead, we will be paid commission from the lender for arranging the mortgage on your behalf.

In Conclusion

As a first time buyer, the market is geared towards helping you get on the property ladder, and if you do some hunting around, you may very well find some lenders offering special incentivized deals on first-time buyer mortgages. Couple that with the Help to Buy Scheme and your chances of getting lending approval for your first home go up considerably. Just make sure that the lender accepts the Help to Buy Scheme before taking that route, as not all of them do.

At REMOUK Ltd, we provide fee-free expert advice on all things relating to home purchases, mortgages and general insurance, as we believe it’s the least our customers should expect from us. If you would like to know more about first-time buyer mortgages, remortgaging or if you’re a home mover and would like to know about anything else mentioned here, head over to our website www.remouk.co.uk or better still, give us a call on 0113 873 0113 and we’ll be more than happy to have a chat.

We offer a comprehensive range of products from across the market for first charge mortgage only. We do not offer deals that you can only obtain by going direct to a lender.

Thanks for reading. We’ll be back soon with more tips and advice on home buying in the UK.

YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.

A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR OTHER DEBT SECURED ON IT.

Remortgaging can represent a brilliant way to liberate a portion of this asset to use on other things., renegotiating... read more

About Us

REMOUK Ltd provides advice on mortgages, protection and general insurance. We are based in Leeds, West Yorkshire but we provide advice to clients throughout the UK.

REMOUK Ltd is an appointed representative of TenetLime Ltd which is authorised and regulated by the Financial Conduct Authority. TenetLime Ltd is entered on the Financial Services Register (www.fca.org.uk/register) under reference 311266.